Commonwealth Property Office Fund launches off-market buyback

The manager and trustee of  the Commonwealth Property Office Fund today announced its intentions to launch an off-market buyback tender for between $50 million and $100 million worth of shares in the A-REIT.

The share buyback follows the sale of a number of prime CBD office assets held by the A-REIT over the last four months including 259 George Street in Sydney, which sold for $395 million July, (with settlement occurring this week); three Perth offices (1 Mill Street, 5 Mill Street and 197 St Georges Terrace) and a 50% interest in 5 Martin Place, Sydney, for a combined $589 million.

It also follows other property funds such as Stockland, Challenger Diversified Property Group and Investa Office Fund undertaking on-market share buybacks.

The fund could buy back between $50 million and $100 million worth of CPA units but reserves the right to buy back any amount up to 10% of units, or any amount below the anticipated range, depending upon market conditions.

The buyback is in line with the fund’s capital management strategy, which was outlined in August 2011.

The buyback scheme will not impact on CP retaining an appropriate capital and liquidity position for other initiatives such as the development pipeline and it also aims to maintain its distribution policy of distributing 70% to 80% of distributable income, or taxable income, whichever is the greater.

Charles Moore, fund manager of CPA, says the off-market buyback is considered appropriate given CPA’s capital position, and has the advantage that retail investors have the option of participating.

Participation in the buy-back is optional, with tender applications closing at 7:00pm, Sydney time, on Tuesday 13 December 2011.

The buyback is open to all eligible unit holders who are registered as at Friday, November 11, 2011.